ACI: RE Inv’t Will Exceed €13,000M In 2015

12 November 2015 – Expansión

The Association of Real Estate Consultants (‘Asociación de Consulturas Inmobiliarias’ or ACI) forecasts that total investment in 2015 will fall below the maximum levels achieved in 2007.

The real estate sector will close 2015 with investment amounting to almost €13,000 million, which represents an increase of around 6-7% with respect to 2014, but still falls short of the maximums recorded in 2007, according to forecasts from the Association of Real Estate Consultants.

In fact, ACI expects that real estate investment will increase again in 2016, as a result of the continuing capital flows. According to the President of ACI, Ricardo Martí-Fluxá, investment in the sector during the first nine months of the year amounted to €10,800 million, which exceeds the total amount spent in 2014 as a whole.

In this sense, ACI considers that the real estate sector is going through a period of boom and consolidation, supported by, amongst other factors: the increase in business confidence, the creation of jobs, financing, low rates of interest and liquidity in the market, mainly thanks to foreign investors.

House prices in Madrid will increase by 3%

In this context, the association forecasts that house prices in the municipality of Madrid will grow by almost 3% by the end of 2015, an estimate that Martí-Fluxá acknowledges “falls short”, given that prices are likely to rise again between 2015 and 2016.

ACI also predicts an increase in the number of transactions in 2016, given the scarce supply of quality properties and an improvement in project financing in the future.

Within the residential segment, 128 property developments (7,000 m2) have been sold in the city of Madrid and prices have varied the most in the districts of Retiro and Tetuán since 2014, with increases of more than 4%. At the opposite end of the spectrum, Moncloa and Chamartín have recorded decreases of 3% and 2%, respectively.

When asked about the situation in Cataluña, the association says that international investors are not really worried about the political uncertainty and although some hotel projects in Barcelona have been put on hold, the ACI members (which include Aguirre Newman, CBRE, JLL, Knight Frank, BNP Paribas Real Estate, Cushman & Wakefield and Savills) are not overly concerned.

Offices and shopping centres

By segment, ACI expects average office rental costs in prime locations to increase by 6.5% between 2015 and 2019. It also expects the shortage of prime products to continue next year and for demand to increase, driven by growth in PIB and employment. In fact, the quarterly volume of new office rentals has exceeded 111,500 m2 in Madrid for the first time since 2008 and 315,000 m2 in Barcelona.

In terms of shopping centres, supply remains very limited and ACI expects 630,000 m2 of new gross leasable space to come onto the market between 2015 and 2016. In 2016, investors’ interest in the shopping centre market will remain high and institutional investors will continue to participate. Socimis and new investment funds are expected to be very active, as are “family offices”, with the notable presence of Brazilian and Venezuelan families. (…).

Original story: Expansión

Translation: Carmel Drake